What are the differences between separation and divorce in terms of selling the house?

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Just as there are differences between separation and divorce, there are differences between how you can sell the house depending on which of these circumstances you are in. This post will detail and shed light on these differences.

Difference 1: Rights to the Home

A divorced couple may have split up their assets, including the house, to allow that person to freely sell it. A separated couple, on the other hand, are still married to each other, and therefore both still have rights to that home. This means that one ex cannot sell the house without the consent of the other. This is especially the case if the house is jointly owned, but even in cases of lone ownership, the other ex may still have, ‘Home Rights’. Briefly, Home Rights state that the matrimonial home is a joint asset between the two separating or divorcing parties and sale of said house cannot occur unless both parties agree to it.

Thus, if you wanted to remain in the house, you could register your rights with the Land Registry. For a more detailed explanation of Home Rights see our previous blog post, ‘My ex was paying the mortgage and wants to sell. What are my options?’ It’s important to note that once a divorce is finalised, Home Rights cannot be enforced and your ex can freely sell the house if he/she so wishes.

Unfortunately, if you do not register your home rights, you don’t have a legal right to remain in your house, even during separation. This means your ex could potentially rent out or sell the house without your agreement. If, however, you’ve helped pay towards house maintenance and/or the mortgage, you may be able to claim, ‘beneficial interest’ in your home. In other words, if you both agreed to sell it, you would get a share of its value after being sold. In circumstances when you haven’t contributed to those things, you still may be able to get an occupation order. This states who can live in your home (i.e. you) ensuring your ex can’t sell the house during separation. After divorce though, the occupation order will run out. You can find out more about occupation orders here.

Alternatively, you may consider getting a separation agreement. As well as setting out who pays off debts and what happens to financial assets, it can also claim who has the rights to the home in case of separation. Therefore, one could sell the house if this agreement stated that they would acquire it (and so long as the court enforced this part of the agreement). For other benefits of separation agreements see here.

Difference 2: Taxes

Though selling a house when divorced can result in a Capital Gains Tax exemption (£11,100 for the 2016/2017 tax year) and reimbursement in certain cases over this amount- if you decide to sell the house when separating you are not given this tax exemption. Usually, this is because the tax relief disappears at the end of the tax year of separation (April 5th) and thus if several months later you did decide to get divorced, you may have missed the mark to sell the house tax-free. If you separate as close to the beginning of the tax year (April 6th) as is possible and immediately decide to sell the house, relief, however may be given, though this is of course dependent on the situation. Consult with a lawyer on the best way to deal with selling the house and separation if you are considering it.

Difference 3: Debt and Assets

When separated, you are still legally married and thus most of your assets and debt accumulated is jointly held. If in the unfortunate circumstance one of you was sued, got into serious debt or used the house as collateral for a business loan (for example) that failed, you both may lose the house and thus the rights to sell it. However, if one of these circumstances occurred during divorce or thereafter, the one without sin (as it were) could potentially buy the house back from the bank or court. They could then do with it what they will (i.e. sell).

When it comes to the stages leading up to- and the actual selling of- the house, separation and divorce can result in different outcomes. If both of you want to sell, then fortunately in both circumstances an agreement can usually be reached. When disagreements occur, issues can be difficult to overturn without court intervention. Therefore, as with anything regarding divorce and separation, consider all of your options, discuss them with your ex and ensure that you both are happy with the final decision.

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